Gov. Pence optimistic feds will accept Medicaid alternative

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HIP Plus, with the best coverage, which requires monthly payments by recipients.

HIP Basic with significantly less coverage but no mandatory monthly payments. It requires co-payments.

HIP Employer Benefit Link, which allows individuals to use state funds to help pay for private plans of their choice through their employers.

Indiana's effort to cover uninsured residents through a state-run health program instead of an expansion of Medicaid took another step forward Thursday when Gov. Mike Pence unveiled a proposal that he said would cover 350,000 residents if approved by the federal government.

Pence's "HIP 2.0" is an altered version of the state's Healthy Indiana Plan, which currently provides health savings accounts to about 40,000 people. Indiana has been seeking federal approval to use the program, which was established in 2008 under former Gov. Mitch Daniels, as its vehicle to cover more uninsured residents.

Pence has long objected to an expansion of Medicaid, which he calls "broken" and a "fiscal monstrosity." Indiana has been seeking a waiver from President Barack Obama's health reform law to use the Healthy Indiana Plan instead, but federal officials have objected to some of the program's requirements, including a provision that recipients contribute the first $1,100 toward their care. A one-year extension of the Healthy Indiana Plan expires Dec. 31.

Gov. Mike Pence says he is “cautiously optimistic” that he has come up with a plan to expand health care coverage in Indiana to uninsured low-income adults that will pass muster with the federal government, Thursday, May 15, 2014.
Danese Kenon/The Star

The revised proposal, which Pence unveiled at Indiana University Health's Methodist Hospital in Indianapolis, would offer two tiers of coverage. The first would provide very limited coverage at little or no cost to those below 100 percent of the federal poverty level. A higher level dubbed HIP Plus would include dental and vision coverage, a comprehensive drug program and maternity services. Participants would pay $3 to $25 per month, based on income.

A third option would give workers who can't afford their employers' health care can help with their premiums from the state.

The proposal would use federal funds and expand the state's hospital assessment fee to cover the cost.

Pence said the expansion of the Healthy Indiana Plan would help low-income residents be personally responsible for their health, unlike traditional Medicaid. The plan also includes a program that will connect HIP recipients with state-sponsored job training and job search programs.

"HIP is not intended to be an entitlement. It is a safety net program that aligns incentives with human aspirations," Pence said.

He described his visits with patients around the state, including a woman named Diana who had held off going to the hospital for treatment because she lacked health care before.

"I think Diana is like a lot of Hoosiers who don't want a handout; they want a hand up," he said.

The proposal needs approval from the Centers for Medicare and Medicaid Services, which administers the federal health reform law. Pence said Indiana will submit its plan by the end of June.

Indiana Democrats, who have been asking Pence to expand Medicaid for well more than a year, gave the proposal a tepid response Thursday.

"I respect that this plan aligns with his personal beliefs, but I have serious concerns that it is an untested proposal that will still fail to provide critical health coverage to thousands of Hoosiers," said U.S. Rep. Andre Carson, D-Indianapolis, in a statement.

Proposed Healthy Indiana Plan 2.0

Gov. Mike Pence will submit a waiver to the federal government by June 30 to adopt an expanded Healthy Indiana Plan. If approved, it will cover all non-disabled Hoosiers ages 19 to 64 with incomes below 138 percent of the federal poverty level, replacing Medicaid for that group of uninsured people.

The program has three separate tiers. Detailed information and the proposed Medicaid waiver can be found at www.HIP.in.gov. Here are the basic elements:

• Available to all those who make their monthly contributions to their health savings account, called the POWER account

• Individuals and state of Indiana jointly fund a $2,500 POWER account, up from $1,100 now. The state, using federal matching funds, will contribute more of the deductible.

• Individuals contribute, based on a sliding income scale, upfront payments to their POWER accounts that amount to, on average, less than 2 percent of their income. That ranges from $3 to $25 per month. The majority, but not all, will pay less than under the current HIP. No other cost-sharing is required.

• Covers maternity services with no cost-sharing for duration of pregnancy.

HIP Basic

• Default plan only for Hoosiers below 100 percent of federal poverty level who do not make POWER account contributions.

• Requires co-payments for all services, except preventive care and family planning services, which may exceed the cost of monthly POWER account contributions under HIP Plus. For example, co-pay for outpatient services is $4; inpatient services, $75; non-emergency ER visit, up to $25.

• Members will use an entirely state-funded POWER account to cover their $2,500 annual deductible.